ADBE

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Software: Adobe Keeps Rolling; Oracle Hit by Venezuela Forex Issues

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On Thursday, Adobe (ADBE) put up better-than-expected fiscal first-quarter performance and issued a strong outlook, while Oracle’s (ORCL) fiscal third-quarter results faced currency challenges and its forward guidance came in about as expected. Adobe achieved revenue of $1 billion, at the high end of the targeted range (and above consensus), and exited the fiscal first quarter with an impressive 1.84 million paid Creative Cloud subscriptions, an increase of 405,000 on a sequential basis. Adobe Marketing Cloud quarterly revenue jumped 24% during the period, to $267 million, a nice showing. Diluted earnings per share on a non-GAAP basis came in at $0.30, beating the consensus figure by $0.05. The fiscal first-quarter results were solid, but the company’s outlook was even better. … Read more

Oracle Steals the Headlines

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Last week was a busy week for Oracle (ORCL). On December 18, the tech giant reported fiscal second-quarter results that showed non-GAAP revenue advance 2% (up 3%, excluding the impact from the strengthening US dollar). Non-GAAP new software licenses and cloud software subscription revenues fell modestly (though it annualized a high-teens growth rate in the year-ago period), while non-GAAP new software license updates and product support revenues jumped 6%. Hardware Systems revenues, including hardware systems products and hardware systems support, were essentially unchanged. Non-GAAP operating income fell modestly on a still-very-healthy non-GAAP operating margin of 46%. Non-GAAP net income nudged 1% higher, but share buybacks bolstered non-GAAP earnings per share expansion to 9%, excluding the impact from a strengthening US … Read more

Creative Cloud Drives Adobe

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Software maker Adobe (click ticker for report: ) announced fiscal third quarter results Tuesday afternoon. Results were a tad shy of expectations on both the top and bottom lines, as revenue declined 8% year-over-year to $995 million and earnings per share slipped 45% year-over-year to $0.32 as the firm moves to a subscription-based business model. Free cash flow remained strong during the third quarter at $169 million, equal to 17% of total revenue. Creative Cloud Success Image Source: ADBE Q3 FY13 Slides The story of Adobe’s third quarter was the continued success of the Creative Cloud product suite. Paid subscriptions surpassed the 1 million mark driving Digital Media ‘Annualized Recurring Revenue’ (ARR) to $655 million. ARR is a wonderful business … Read more

Adobe Kicks Off 2013 With a Solid First Quarter

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Software developer Adobe (click ticker for reported: ) kicked off its 2013 fiscal year with solid first quarter results driven by strong Creative Cloud membership growth. Revenue declined 4% year-over-year to $1 billion, which was expected as the company transitions to a subscription model. Revenue marginally exceeded consensus estimates. Earnings per share fell nearly 40% to $0.35 on a non-GAAP basis, a few cents above consensus expectations. Like revenue, net income was expected to fall, but we are a bit disappointed by $0.17 per share in stock-based compensation. More important for tech companies like Adobe is free cash flow, which was strong at $261 million and essentially equal to the year-ago period. We remain impressed by the company’s ability to … Read more

Adobe Issues Poor Outlook But Cash Flow Generation Remains Very Strong

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Adobe (ADBE) reported poor fiscal first-quarter 2012 results after the close Monday that disappointed most investors. Though we plan to update our valuation model on the firm, we don’t expect to make a material change to Adobe’s fair value at this time. The company’s revenue advanced a modest 1.7% in its fiscal first quarter as subscription and services-and-support sales expansion offset weakness in its products segment, which fell over 4% from the same period a year ago. Adobe’s gross margin, however, improved to 89.6% from 89.5% in last year’s quarter. Operating income fell 4.4% from the year-ago quarter, as sales and marketing expenses surged. There was nothing concerning in the firm’s below-the-line items, though the company did suffer from a … Read more

Adobe Posts Excellent Fourth-Quarter Results; Focus Remains on Cloud

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Software-maker Adobe (ADBE) reported fiscal fourth-quarter results after the close Thursday that showed strong revenue and earnings expansion driven by its digital media and marketing businesses. We are maintaining our above-market fair value estimate for Adobe. Revenue jumped 14% in the period, to $1.152 billion, exceeding the high end of the company’s guided range. The company generated some nice growth (record volume licensing with enterprise customers) in its flagship desktop product, CS5.5, and received some traction from new applications like Edge and Muse, which are levered to advances in HTML5. Management noted that recurring revenue now represents roughly 20% of total revenue and that it experienced strong demand in all major geographies, including Europe. Non-GAAP operating income increased nearly 16%, while … Read more